The traits of a great business worth investing in

When it comes to making money on the stock market, there are a few key traits that you should look for. Spot these traits and you could be on your way to a great investment in a great company. Read on to uncover the traits of a great business worth investing in…

You can define great businesses in a number of ways, Dan Ferris in Daily Wealth explains…

But most great businesses share some common traits.

These traits are:

A durable competitive advantage. This is an advantage over the competition that is likely to last a long time.

Thick profit margins. This shows a company is efficient at allocating capital and controlling costs. This means more revenue for profits.

It's not a coincidence that many of the world's greatest businesses become huge blue-chip companies. A great business can be scaled quite easily... So given enough time, many of them grow to be very large.

It's an advantage in some ways. Obviously, it's a hindrance in others. You can't grow as fast once you're big. But you can still grow. And in general, you can pay for that growth much easier than your smaller competitors can.

For example, Wal-Mart is better at cutting costs and moving large amounts of merchandise for a low price than anybody else is. ExxonMobil is better at navigating the cycles of the oil and gas industry than anybody else is.

You can go right down the list and say this company is better at this than anybody else is... and it's how they got so enormously big. Wal-Mart, ExxonMobil, Apple, Microsoft... They are some of the biggest companies in the world, and they're all hugely successful.

That's probably the simplest way to see there's something special going on. That they have something other companies don't.